HollyFrontier and its transportation business Holly Energy Partners (HEP) have signed agreements to acquire the majority of Sinclair Oil’s assets for $2.6bn.
The announcement comes as fuel demand is gradually recovering from the historic lows of last year due to Covid-19.
As agreed, HollyFrontier will acquire Sinclair Oil’s branded marketing business and all commercial activities, renewable diesel business, and two premier Rocky Mountain-based refineries.
HollyFrontier will also establish a new parent company called HF Sinclair, which will replace HollyFrontier as the public company trading on the New York Stock Exchange.
At closing, HollyFrontier shares will convert into shares of HF Sinclair on a one-for-one basis. Subsequently, HF Sinclair will issue around 60.2 million shares of common stock to Sinclair Oil’s parent firm The Sinclair Companies, providing them with a 26.75% pro forma stake in the new company.
Based on HollyFrontier’s fully diluted shares of common stock outstanding and closing stock price on 30 July 2021, the transaction will value around $1.8bn.
Separately, HEP will acquire Sinclair’s integrated crude and refined products pipelines and terminal assets. It will include around 1,200 miles of pipelines, eight product terminals and two crude terminals with a capacity of around 4.5MMbbl.
The overall pipeline and storage business is expected to be worth around $758m.
The transactions are expected to close in the middle of next year, subject to customary closing conditions and regulatory clearance.
HollyFrontier and HEP Mike Jennings said: “HollyFrontier was formed through a transformational merger that facilitated a decade of significant stockholder returns along with growth and diversification into lubricants and renewables.
“We believe these transactions with Sinclair represent a similar inflection point, marking the beginning of our next chapter as HF Sinclair.
“With this accretive transaction, we are adding an integrated marketing business with an iconic brand while building on the strength of our expanded refining network, increasing our scale and accelerating the growth of our renewables business.”
The transaction does not include exploration and production assets owned by Sinclair Oil & Gas Company.